The following apology was printed in the Observer's For the record column, Sunday December 3 2006

Contrary to the article below, administrators BDO Stoy Hayward will not receive a portion of the money earned from a premium-rate telephone information and claims line set up for victims of the collapsed Christmas savings company. All income from the line goes to the telephone contractor. We apologise for this error.

MPS have slated Farepak administrator BDO Stoy Hayward for setting up an expensive premium-rate telephone information line for victims of the collapsed Christmas savings company.

BDO Stoy Hayward will itself receive a portion of the money earned from the 0870 telephone line, which charges 8p per minute during peak hours, 5p per minute in the evening, and 3p per minute at weekends.

The accountancy firm says this is intended to cover the costs of handling compensation claims from up to 150,000 Farepak savers, and strongly denies it is profiting at the victims' expense.

But the cost of calls threatens to pile unexpected financial hardship on Farepak savers from low-income backgrounds. Only last week BDO Stoy Hayward warned Farepak customers they could expect a maximum refund of 4p for every pound they had invested.

Yesterday Labour MP Tom Watson called the move 'terrible'. He added: 'This adds insult to injury for Farepak's victims. The administrators are earning plenty from professional fees. They weren't obliged to set up a premium-rate line and they shouldn't have done it.'

A spokeswoman for the National Consumer Council said: 'There are a lot of clever people at BDO Stoy Hayward. You would think they could organise something that wouldn't penalise the poor claimants.' Ofcom has also expressed concern about 0870 numbers. A spokesman for the telecoms regulator said: 'The problem is that consumers sometimes think they will be charged the same as for a national phone call.'

Gordon Tempest-Hay, a spokesman for BDO Stoy Hayward, defended the firm, insisting that any money made from the line, which is administered by Opal Telecom, part of Carphone Warehouse, would go towards the running costs of a call centre.

'Farepak is a unique administration because there are so many creditors,' he said. 'We have to provide a service that enables up to 150,000 creditors to lodge their claims and to guide them. It's not just a claims recording service. What are we meant to do - have one man on a phone?' he said.

The plight of Farepak savers, who have collectively lost an estimated £40m since the company's collapse last month, has prompted impassioned debates in the House of Commons. The Department of Trade and Industry is currently investigating Farepak's demise.

Many companies that had business relationships with Farepak have contributed to a charity fund for the victims, which has so far collected more than £5m. Donors include Halifax, formerly Farepak's principal lender, and retailers such as Tesco, Boots and WH Smith, which sold vouchers to the company.

However, Royal Bank of Scotland, which provided banking services to Farepak, said this weekend that it would not be contributing to the fund. 'We give a lot of money to deserving causes but our charitable giving has been allocated for the rest of this year,' a spokesman for RBS said. 'This Christmas we are giving £1m to children's charities, focusing on the disadvantaged. But we can't give to everyone, sadly.'